Andrew, good you got it. Yes, PCM is Pulse Code Modulation(that explains everything, right?). Well, a bit(intended)oversimplified, but adequate in this context, Bitstream means digital multichannel information and PCM means digital stereo; the two are both digital, but are encoded differently. So, if the player was set to send PCM stereo, but the receiver was trying to find and decode Bitstream multichannel, nothing resulted.
Elaborating on the DPLIIx point, DPLII is used to extract natural ambience from two channel material and steer it to side and back(if present)surrounds, where it belongs. If the material is five channel, DPLIIx is in effect and the three front channels are unaffected. The side surround channels discretely already contain the surround information and DPLIIx processes them to extract the information which should image in back, sending it to the back surround speakers in "stereo" form.
